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Zapota, Inc., has a 1-year contract for the production of 200,000 gear housings for a new off-road vehicle. Owner Alexander Zapota hopes the contract will be extended and the volume increased next year. Zapota has developed costs for three alternatives. They are general-purpose equipment (GPE), flexible manufacturing system (FMS), and expensive, but efficient, dedicated machine (DM). The cost data follow: 
General- Flexible 
Purpose Manufacturing Dedicated 
Equipment System Machine 
(GPE) (FMS) (DM) 
Annual contracted 
units 200,000 200,000 200,000 
Annual fixed cost $100,000 $200,000 $500,000 
Per unit variable 
cost $ 15.00 $ 14.00 $ 13.00 
Which process is best for this contract?

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M984610

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